Boeing (NYSE: BA) is the largest aerospace company in the world. Few know that besides being a manufacturer of commercial jetliners, it is very active in defense, space, and security systems also. Boeing has customers in 150 countries around the world and employs around 170,000 people around the world.
The recent visit by China’s President Xi Jinping to the US ended with billions of dollars in orders for both Boeing and their arch-rival Airbus. However, in a move designed to diversify from having its incomes coming only from manufacturing commercial jetliners, Boeing and Lockheed Martin formed a joint venture company that had just been awarded almost one billion dollars in a contract designed to assist US Air Force in launching satellites.
This is just an example of what this management team is willing and able to do, and shows the ability of the company to shift gears and open new horizons when it comes to increasing shareholder wealth.
Boeing’s share price enjoyed the last round of quantitative easing across the world. Between the US, Europe, and Japan, each government buys tremendous amounts of their own bonds in order to stimulate growth in a world characterized as having economic difficulties and lacking inflation.
The direct effect of bond-buying programs is that it inflates assets and therefore the stock market is the main beneficiary, as long as these quantitative easing programs are still running.
It is no wonder that Boeing’s share price almost tripled in the last four years, and I would say there is more potential to the upside.
Their stock is currently trading at around $136/share after briefly breaking the $150/share mark. Boeing’s share price is still enjoying bullish potential as long as oil stays below the one hundred level mark, and flying becomes cheaper by the day.
It seems to be only a matter of time until the 150 mark will be tested again, and therefore I am favoring call options from the current 136 level with a one-month expiration date.
Even if the monetary policy in the United States is about to change, as Fed Williams says, it will be only a simple quarter of a basis point and not the start of a tightening cycle. This translates in equities moving higher after the first reaction and Boeing is a favorite for a spike from both a technical and a fundamental point of view.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
